How to Maximize Client Loyalty

Many financial advisors believe that their clients are very faithful to them and are completely satisfied with the service that they are providing. 

Unfortunately, according to one of the major studies done by Russ Alan Prince, among the wealthy clients he surveyed, only about one-quarter (26.7%) rated their advisors as excellent. More than two-thirds (69.7%) ranked them as fair, while 3.6% fell into the poor category.  This means that nearly three-quarters of wealthy clients are either highly receptive to working with other advisors or are actively looking to change to another advisor.

Obviously, it appears that the one quarter of the clients were very satisfied with their advisor and it is always a good idea to review what the successful advisors are doing in order to duplicate their services.

Think about it – why are these successful advisors’ current clients allowing them to manage most or all of their assets and even provide them with qualified referrals, not to mention keeping their clients for decades at a time?

It is usually very simple – these advisors have succeeded in building true client loyalty.  It is this loyalty that usually continues through down markets, changes in their businesses and even personal issues in their clients’ lives.

One of the major issues, of course, is that these advisors know that everything revolves around the client.  It is important to realize that very simple, but very often overlooked fact – “Most people don’t understand money!” Therefore, advisors very often concentrate primarily on providing investment results and details but the client is either not interested in, or is just not intelligent enough to understand.

Always remember – clients’ loyalty and opinion about their financial services firm is based upon more on service than it is on investment results!

The first thing you should look at is making sure to always show concern and empathy for your clients. 

So – how do you do that?

One of the key things to remember is that “Perception is Reality”!  If the client truly believes that you care about them, then this is one of the first key areas to address.  Think about it – if you really believe that your doctor cares about you and gives you personal attention, you realize how important it is that other professionals at least give the impression that they are truly interested in your well-being.

The same thing applies to your financial clients.

The first thing is to have constant communication between you and your clients.  In fact, your minimum goal is to get your name in front of them at least once per month.  You might think this is a lot, but is it really that difficult?

The best ways you can get your name in front of them monthly would include:

A.  Quarterly meetings with clients;

B.  Quarterly economic overview newsletter (You can use ours, its FREE for members);

C.  Birthday card;

D.  Year End Holiday card;

E.  A Client Appreciation Event

This will end up generating at least 11 out of the 12 contacts.  The remaining ones can be other client appreciation events, seminars, or any other number of various ways to add that “magic touch” for your clients.

For example, always send flowers to clients that either have a special celebration, such as the birth of a new grandchild, the wedding of a child, or anniversary.  In addition to this, flowers are definitely a good idea in the event of illness, or, of course, a passing.

The next area is the issue of personalization. For example, it is best to get as much personal information about the client as possible, especially during the initial client interview.  This discovery process should not only find out about your client’s assets, but also details about their interests, hobbies, volunteer work, and their goals, needs and objectives that address not only financial needs, but life goals as well. 

So, what will that really accomplish? 

You can always choose a specific gift appropriate for specific interests.  In the event that the client is a golfer, you might give them a special gift on golfing or something funny related to this particular subject.   Many times the client will call back after receiving such a personalized gift and ask, “How did you know that this was one of my main interests?”

Demonstrating your expertise in your specific niche is also a critical way to attract and retain affluent clients.  In most cases, affluent clients will come to you based upon your initial confidence and technical capabilities.  However, it is important to always emphasize and reinforce that you are continuing to be the top advisor in your particular field.

For example, it might be a good idea to publish articles for your target market in the appropriate trade organization magazines and send reprints to your clients. In addition to this, you may want to write a book or article that will also illustrate your expertise in your niche.  Be sure to not only send this out to your existing clients, but also to your prospects as well.

One of the other ways to establish your authority as an expert is to give seminars and other presentations before certain groups that address topics that are particularly interesting to your target market. 

For example, in the event that your niche is retirees, it might be a good idea not only to address the issues of investments, which is what most advisors will do, but also address certain areas such as IRA beneficiaries, update on their estate plan, the new HIPAA laws, and new tax laws that may affect this specific type of clientele.

Remember – most affluent clients request and demand the best advisor in their field – make sure that you communicate that you’re the best, at least in the financial services industry!

Maintaining contact at least twelve times per year should be your minimum with your ultimate goal being about 15 to 18 times!  Although this seems like a lot, it should really be very simple once you set up a system that addresses the issue of communicating with your clients on a regular basis.  This would include any invitations to seminars, announcements of special events, or even a simple call from your financial assistant to ask the client whether or not everything is okay!

Many advisors complain that these added services cost a significant amount of money.  Before you come to this conclusion, please add up these specific expenses it actually takes to retain your clients.  You will find out that the actual expense is very minimal compared to the income that you should be earning off of this client, especially if the client is fee-based.

Cost-effectiveness is another major area that the affluent also require.  Affluent clients are usually willing to pay above-average prices, but only when they believe that the service and advice are worth the cost.

So – how do you do that?

First of all, one of the key features is to provide comprehensive financial advice. One of the easiest ways to differentiate yourself from other advisors is to address other areas that are a key part of their financial plan that is separate from investments – this includes estate planning and income tax planning. Unfortunately, based upon the latest survey, it is estimated that less than 4% of financial advisors even look at a client’s tax return! This is absolutely ridiculous, because I do not believe that proper financial advice can be given without determining what the income tax consequences will be before the transaction takes place.

One of the key features, of course, is to provide a brochure that specifically addresses each of the services and details that you provide for your fee. It is imperative to especially highlight the areas that your niche usually demands and that most other advisors do not usually address!  In the event that the client is not aware of these differences, then how can the client compare you to other advisors anyway?

In addition to this, many clients are not aware of what the average cost for the financial services is anyway!  For example, the client might balk at your 1% annual management fee, even though the average charge for an account of this size might be 1.3%.  It is a very good idea to document this in order for the client to also understand that you might be undercharging compared to other advisors and the client may not be aware of this. 

In addition to this, many advisors actually provide the specific monetary gains that they have achieved for the client over the last year.  For example, the advisor may have beaten the return of the specific index in which they were invested.  This also might include income tax savings, etc.  However, I feel that one of the last things you want to do is strictly deal with monetary issues since most affluent clients are also concerned about making sure that you deal with the non-financial aspects as well.

The last area that is important is your enthusiasm.  It is very important to at least convey to your clients and prospects your interests in your business and industry.  Please remember that “Enthusiasm is Contagious!”

For example, if you get excited about your industry, the successes of your existing clients, and the development of your business, then most clients will get emotionally involved as well. Once that they see that you are not just a walking computer that has no personality, they will look forward to meeting with you and also interested in your personal success as well! Think about it – don’t you just love it when your client sends you a personalized Christmas card?

The bottom line is that if you take these small, but important, steps noted, loyalty and referrals should remain very high!